# SBA 7(a) loans

Source: https://businessloanbroker.ai/business-loans/sba-7a-loans/
Site: BusinessLoanBroker.ai (powered by Levr)

> SBA 7(a) loans go up to $5 million at prime plus 3% to 6.5%, with terms to 25 years. Who qualifies, the real cost with fees, timing and how to apply.

The SBA 7(a) loan is the most flexible government guaranteed loan in the US: up to $5 million for working capital, buying a business, equipment, real estate or refinancing, at a rate capped at prime plus 3% to 6.5%. With prime near 7% in 2026 that is roughly 10% to 13.5%, over terms of up to 10 years, or 25 for real estate. Most lenders want two years in business and 680 credit, and closing takes 30 to 90 days.

## Key facts
- **Amounts:** Up to $5 million; most loans between $150,000 and $2 million
- **Typical cost:** Prime plus 3% to 6.5% (about 10% to 13.5% with prime near 7%), plus a guarantee fee of 0% to 3.75%
- **Terms:** Up to 10 years for working capital and equipment, 25 years for real estate
- **Time to fund:** 30 to 90 days from a complete file
- **Minimums most lenders use:** 2 years in business, 680 credit, DSCR of 1.25, 10% equity on purchases

## What is an SBA 7(a) loan?

A 7(a) loan is a term loan from a bank or approved lender, with the SBA guaranteeing 75% to 85% of the balance. The guarantee is why a lender will stretch a working capital loan to 10 years and a building loan to 25, with no balloon, when a conventional loan would be 3 to 5 years. Almost any legitimate business purpose qualifies, which is why it is the default for [buying a business](https://businessloanbroker.ai/business-loans/business-acquisition-loans/), [opening a franchise](https://businessloanbroker.ai/business-loans/franchise-financing/) or [refinancing expensive debt](https://businessloanbroker.ai/situations/refinance-business-debt/).

Variants exist for exporters and for smaller loans, but the standard 7(a) is what most owners end up with.

## Who qualifies for an SBA 7(a) loan?

On paper: a for profit US business within size standards, owned by people who have put their own money in and cannot get the same terms elsewhere. In practice, lenders apply their own bars, and these decide most outcomes.

- Two or more years in business, owner credit of 680 or higher, and a [DSCR](https://businessloanbroker.ai/glossary/dscr/) of 1.25 or better on the last filed return.
- For a purchase, 10% of the project cost from you, which can include a seller note on standby.
- Common declines: unpaid federal taxes, a prior default on federal debt, a recent bankruptcy, and revenue falling two years running.
- Startups can qualify with experience and 10% to 30% cash, but fewer lenders will look. See [startup business loans](https://businessloanbroker.ai/business-loans/startup-business-loans/).

## What does an SBA 7(a) loan really cost?

A typical example: you borrow $500,000 over ten years at prime plus 2.75%, about 9.75% today. The payment is roughly $6,540 a month and total interest is about $285,000 over the full term. If prime rises one point, a variable payment rises by about $270 a month.

Fees come on top. The SBA guarantee fee is 0% to 3.75% of the guaranteed portion depending on loan size and the year's schedule, which on this loan could be anywhere from nothing to around $14,000, usually financed into the loan. Lenders may add packaging fees of $2,000 to $5,000, plus closing costs such as appraisals and title. See the full picture in the [SBA loan calculator](https://businessloanbroker.ai/tools/sba-loan-calculator/).

## How do you qualify, and what documents do you need?

The 7(a) file is the heaviest in small business lending: three years of business and personal tax returns, interim financial statements no older than 90 days, a debt schedule, a personal financial statement for each 20% owner, formation documents and a short business plan or use of funds. Purchases add the purchase agreement, the seller's three years of returns and a valuation.

Gather everything from the [document checklist](https://businessloanbroker.ai/guides/document-checklist/) before you apply; incomplete files are the main reason a 45 day loan becomes a 90 day loan. Read [personal guarantees](https://businessloanbroker.ai/guides/personal-guarantees/) too, because every 20% owner signs one.

## How long does an SBA 7(a) loan take?

Typically 30 to 90 days from a complete application to funding. A lender with preferred status can approve in house, which usually means 30 to 45 days; a lender that must send the file to the SBA adds two to four weeks. Real estate adds an appraisal and often an environmental report, and acquisitions add a valuation, each of which can take two to three weeks on its own.

If you need money faster, [SBA Express](https://businessloanbroker.ai/business-loans/sba-express-loans/) trades a smaller maximum and a higher rate for a 36 hour SBA decision.

## When should you choose something else?

Choose an [SBA 504 loan](https://businessloanbroker.ai/business-loans/sba-504-loans/) if the purpose is a building or heavy equipment and you want a fixed rate on most of the loan; our [7(a) versus 504 comparison](https://businessloanbroker.ai/compare/sba-7a-vs-504/) shows when each wins. Choose a conventional [term loan](https://businessloanbroker.ai/business-loans/term-loans/) if your bank will lend without the guarantee, because you skip the guarantee fee and close faster.

Choose something else entirely if you need money inside 30 days, your credit is under 650, or your last return shows a loss. Those files are declined far more often than approved, and the two months of effort is real.

## How do you apply for an SBA 7(a) loan?

Apply once on this site and your application reaches SBA 7(a) lenders that fit your industry and loan size, plus conventional lenders that might be faster, so you can compare. It is free for your business, and we are paid the same whichever lender you choose. If you would rather not assemble the file by hand, ask your AI assistant to apply through our [MCP server](https://businessloanbroker.ai/agents/): it reads your returns and statements, completes the application and submits it, and offers come back to one place.

| Option | Amounts | Typical cost | Speed | Best for |
|---|---|---|---|---|
| SBA 7(a) | Up to $5M | Prime plus 3% to 6.5% | 30 to 90 days | Flexible purpose, long terms, low cost |
| SBA 504 | Up to $5.5M | Fixed CDC rate plus bank rate | 45 to 120 days | Buildings and heavy equipment |
| Conventional term loan | $25,000 to $5M | 7% to 30% APR | Days to 8 weeks | Strong borrowers who can skip the guarantee fee |

## Questions and answers
**What is the maximum SBA 7(a) loan amount?**

$5 million. The SBA guarantees 85% of loans up to $150,000 and 75% above that, with the guaranteed amount capped at $3.75 million. Most 7(a) loans are far smaller, typically between $150,000 and $2 million.

**Are SBA 7(a) rates fixed or variable?**

Most are variable, priced off the prime rate and adjusted quarterly. Some lenders offer fixed rates, usually a point or so higher. The SBA caps the margin at 3% to 6.5% over prime depending on loan size and term.

**Can I use a 7(a) loan to buy a business?**

Yes, it is the most common use. You need 10% of the purchase price as equity, which can include a seller note on full standby, and the business must show cash flow that covers the new payment at a DSCR of 1.25 or better.

**Is there a prepayment penalty?**

Only on loans with terms of 15 years or longer, and only in the first three years: 5%, 3% and 1% of the prepaid amount in years one, two and three. Loans under 15 years can be repaid early without penalty.

## Related
- [SBA 504 loans](https://businessloanbroker.ai/business-loans/sba-504-loans/)
- [SBA Express loans](https://businessloanbroker.ai/business-loans/sba-express-loans/)
- [Business acquisition loans](https://businessloanbroker.ai/business-loans/business-acquisition-loans/)
- [SBA 7(a) versus SBA 504 loans](https://businessloanbroker.ai/compare/sba-7a-vs-504/)
- [Business loan document checklist](https://businessloanbroker.ai/guides/document-checklist/)
- [SBA loan calculator](https://businessloanbroker.ai/tools/sba-loan-calculator/)

## Apply
Apply for the business: https://apply.businessloanbroker.ai/signup?utm_source=direct&utm_medium=organic&utm_content=md-sba-7a-loans
MCP server for AI agents: https://mcp.businessloanbroker.ai/mcp (docs: https://businessloanbroker.ai/agents/mcp/)